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Pandas, cyber warfare and China: Olive

Some circumstantial evidence is very strong, as when you find a trout in the milk.”
— Henry David Thoreau

For centuries, China has been lending pandas to countries as a goodwill gesture. And the gambit usually works.

In January, the Virginia-based security firm Mendicant reported that a facility on the outskirts of Shanghai thought to be run by the People’s Liberation Army (PAL) had stolen trade secrets from more than 140 U.S. companies, including Ford Motor Co., General Motors Corp., Motorola Inc., Dupont Co., Dow Chemical Co. and Cargill Inc.
Associated Press

On cue, Ontario Premier Kathleen Wynne, Foreign Affairs Minister John Baird and Toronto Mayor Rob Ford have been jockeying for a spot in the photo-op with Laureen Harper when giant pandas Er Shun (“Double Smoothness”) and Da Mao (“Big Mao Tse-Tung”) arrive at Pearson International Airport this Monday.

It might be unseemly to look a gift giant panda in the mouth. But here goes.

Computer hackers widely thought to be based in China target North American governments and businesses thousands of times every day.

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In 2010, cyber-spies thought to be operating from China broke into computers at Canada’s finance, treasury and defence ministries in what Daniel Tobok, a U.S. cyber detective called in to investigate the breaches, described as “one of the biggest attacks we have ever seen.”

Earlier that year, hackers of suspected Chinese origin attacked several Bay Street law firms in an espionage bid tied to the ultimately failed $38-billion takeover offer for Saskatchewan’s Potash Corp. by a British firm. Last month, the
Wall Street Journal
reported that, according to an ex-Nortel Networks Corp. employee, Nortel’s computer databases had been systematically plundered by China-based hackers from 2000 to 2009, when Nortel filed for bankruptcy protection.

Back in 2010, two U.S. groups examining cyber attacks claimed that computers at diplomatic posts and government operations in 103 countries had been cracked by cyber-spies working from computer servers in China. And in January, the Virginia-based security firm Mendicant reported that a facility on the outskirts of Shanghai thought to be run by the People’s Liberation Army (PLA) had stolen trade secrets from more than 140 U.S. companies, including Ford Motor Co., General Motors Corp., Motorola Inc., Dupont Co., Dow Chemical Co. and Cargill Inc.

The problem has become sufficiently acute to vie with America’s efforts, similar to Canada’s, to develop friendlier relations with a China whose markets we seek greater access to, and whose potential as a regional military hegemony the U.S. and its allies Japan, Taiwan and South Korea have sought to restrain only by “soft-power” diplomatic means.

Alluding to China without naming it, U.S. President Barack Obama in his January State of the Union address declared that offshore cyber-attackers “are seeking the ability to sabotage our power grid, our financial institutions and our air traffic control systems.” Last month, Obama unveiled measures to better protect public- and private-sector U.S. computer networks from sabotage and theft of intellectual property and military secrets.

Any student of the 19th-century Opium Wars will attest that economic empire building – in that case by the British and Americans – is an ugly business. With China emerging as an economic superpower, poised to overtake the U.S. in GDP by mid-century, it wouldn’t surprise any future historian that suspected rampant intellectual property theft played an essential role in China’s economic miracle.

Which China denies, of course. Last month the Chinese embassy in Ottawa released a statement saying “Cyber attacks are translational and anonymous. It is irresponsible to prejudge the origin of attacks without thorough investigation and hard evidence.” The Chinese have lately gone further, insisting this month that they are the chief victims of hacker theft of military and trade secrets, mostly of U.S. origin. But there’s no hard evidence for that claim, either.

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In a cat-and-mouse game where an Internet domain name of two weeks’ existence passes as hard proof, the preponderance of circumstantial evidence points to China. In 2011, McAfee, the U.S. computer security firm, asserted that hackers based in China had stolen trade secrets from Western oil companies. Classified files held by the U.S. government link several cyber-attacks to the PLA. WikiLeaks has published diplomatic cables linking cyber-attacks on Goggle Inc. and Intel Corp. to operatives in the Chinese Politburo. And Mendicant insists that the years of hacking it uncovered could not have happened without the “full knowledge and co-operation” of Beijing, given China’s relentless control of Internet activity.

Yet global security experts don’t suspect the Politburo of a master plan. Instead, they link cyber-malice to the PLA, Chinese spy agencies, China’s powerful state-owned enterprises, and to Chinese regional military authorities. Each group keeps the others in the dark about what they’re doing. This, conveniently, offers “plausible deniability” to China’s political leadership.

I’m no less immune to the seductive cuteness of pandas than the next person. But given the immensity of the 24/7 cyber-attacks we’re enduring, and China’s intransigence on the issue, I’d prefer we made our own gesture – likely the first on record. I’d turn Er Shun and Da Mao back to the only homes they’ve known, in southwest China. “Gesture politics” has its place, I suppose, but not when economies are at stake.

In a column last month I suggested that then-PM Brian Mulroney was ahead of his time in promoting free trade, long before the current proliferation of trade liberalization deals. Readers correctly objected that in the years following the 1989 implementation of the Canada-US. Free Trade Agreement (FTA), Canada has slipped in the global economic rankings, to 11th from 6th.

That is readily explainable by the dynamic growth of the so-called “BRIC” economies (Brazil, Russia, India and China). Their rapid growth also displaced Spain from 1989’s top 10 economies, and caused Japan, Germany, France and Italy to also slip in the rankings. With its 1,740 per cent economic growth since 1989, China has eclipsed Japan as the #2 economy.

That said, in the 24 years since the FTA went into effect, Canada has outpaced the GDP growth of its G-7 peers — the world’s most mature economies, whose rate of GDP growth necessarily lags that of emerging economies — with a gain of 224 per cent. According to the International Monetary Fund (IMF), Canada also leads the G-7 in the more important measure of GDP per capita, the chief measure of standard of living. The figure for Canada in 2011 is $50,496, per person, compared with $48,328 for the U.S., and an average of $35,185 for the 27 member countries of the European Union.

Where we are doing miserably is in the U.N.’s Human Development Index (HDI) of the world’s most livable countries. Canada placed first on this measure eight times between 1992 and 2000, but currently ranks 11th. While economics figures into the HID calculation, so does commitment to education, health care, environmental safeguards, social protections, and reducing the gap between rich and poor, where we now lag the top performers.

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